Prepare a journal entry for the purchase of office equipment on February 19 for $31,700, paying $7,600 cash and the remainder on
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Answer:
Explanation:
1. Number of goods available for sale = Beginning Inventory + Purchase, March 5 + Purchase, September 19 = 4,000+10,000+6,000 = 20,000 units
Cost of goods available for sale = Beginning Cost of inventory + Cost of Purchase, March 5 + Cost of Purchase, September 19 = 4,000×24 + 10,000×25 + 6,000×27 = 96,000+250,000+162,000 = $508,000
2. Number of units in ending inventory = Number of units available for sale - Number of units sold = 20,000-4,200-9,000 = 6,800 units
3. Calculations are attached
4.
Income statement FIFO:
Sales $937,800 (4,200×69 + 9,000×72)
Less: Cost of Goods Sold ($326,000)
Gross profit $611,800
Less Operating expense $602,000
Net income $9,800
Income statement LIFO:
Sales $937,800 (4,200×69 + 9,000×72)
Less: Cost of Goods Sold ($342,000)
Gross profit $595,800
Less Operating expense $602,000
Net loss $($6,200)
Income statement LIFO:
Sales $937,800 (4,200×69 + 9,000×72)
Less: Cost of Goods Sold ($334,092)
Gross profit $603,708
Less Operating expense $602,000
Net income $1,708
**Cost of goods sold:-
Under FIFO = 96,000+5,000+225,000 = $326,000
Under LIFO = 105,000+162,000+75,000 = $342,000
Under weighted average method = 103,782+230,310 = $334,092
6. LIFO method minimize taxes
